Investors with an interest in Transportation - Truck stocks have likely encountered both Knight-Swift Transportation Holdings (KNX) and Saia (SAIA). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Knight-Swift Transportation Holdings is sporting a Zacks Rank of #2 (Buy), while Saia has a Zacks Rank of #3 (Hold). This means that KNX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
KNX currently has a forward P/E ratio of 38.45, while SAIA has a forward P/E of 41.50. We also note that KNX has a PEG ratio of 1.05. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SAIA currently has a PEG ratio of 2.26.
Another notable valuation metric for KNX is its P/B ratio of 1.74. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SAIA has a P/B of 4.8.
These are just a few of the metrics contributing to KNX's Value grade of B and SAIA's Value grade of D.
KNX stands above SAIA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that KNX is the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
